Europe close: Stocks push higher despite AI sell-off

(Sharecast News) - European stocks rose for the second straight session on Thursday, with the Stoxx Europe 600 index hitting its highest in over three weeks, helped by the region's relatively low exposure to the global AI sell-off.

The Stoxx 600 finished in positive territory for the fourth time in five days, rising 0.4% to 640.16, with solid gains in London, Zurich and Paris outweighing losses in Milan and Madrid. This was the highest close since 22 September.

Equity markets had started on the back foot, following heavy losses in Asia and US futures as concerns over higher borrowing costs raised questions about the sustainability of current AI investment levels.

Worries were fuelled by US inflation accelerating to 3.7% in September, as data showed on Wednesday, increasing expectations that the Federal Reserve could tighten monetary policy further and keep interest rates higher for longer.

Investors are worrying about whether the vast outlay to build water and power-hungry data centres will generate meaningful returns relative to the billions being outlaid in capital expenditure.

Concerns were weighing heavily on European chipmakers and AI infrastructure stocks on Thursday, such as ASML, Infineon Technologies, ASM International, STMicroelectronics, Siemens Energy and Schneider Electric.

In other equity movements, shares in Ericsson surged nearly 12% after the Swedish telecoms equipment maker reported stronger-than-expected third-quarter sales, driven by robust demand for network equipment in Asia and the Middle East.

Pernod Ricard edged higher after posting a smaller-than-expected decline in quarterly sales, as buoyant demand in India helped offset tougher trading in the US and China.

In London, paper and packaging firm Mondi dropped sharply after reporting lower underlying earnings sequentially in the third quarter as planned maintenance shutdowns and higher costs weighed on profitability.

In European economic data on Thursday, French inflation surged to 3.4% in September from 2.6% in August, marking the highest rate since January 2024, driven largely by surging energy prices and rising food costs.

UK real GDP rose 0.1% in August, a slowdown from July's 0.4% expansion but better than the 0.1% contraction expected by analysts. Real GDP rose 0.7% over the three months to August, ahead of the 0.5% forecast.

Meanwhile, eurozone industrial production fell by 0.5% in August, marking the third decline in a row, and coming in below expectations for no change.